A silver line seems to appear on Daily & monthly charts of Brent Oil. Crude oil price will decide employment opportunities in energy sector in 2020

Falling oil prices and COVID-19 together has caused huge drop in Oil & Gas activities and consequently employment opportunities. However, Crude oil prices have been in bullish trend for last four months. Even during COVID crisis, the short bullish trend has been a hope for revival of business and employment . One obvious reason could be the crude oil prices being historically low. At USD 20, it was a throw away prices. Still Oil companies in Asia and Middle East survived and now at USD 45, they can relief a bit. 

With expectation of relaxation in Corona numbers, we were expecting that demand will come back. Saudi Aramco, world’s largest crude oil extractor has also foreseen recovery in demand last week. However, crude oil has not shown the sparkle much. The silver line is that crude is taking support at 44-45 USD level. 

On daily chart, the resistance for Brent oil is seen at the low made on 9th March, 2020 when crude opened with a big gap down. The positive observation is that on daily charts, the gap on 8-9th march seems to be filled up and next resistance could be at 45 USD.

Here inwards, crude prices are in a sideways trend over last couple of weeks. While the positive news on demand, increase in aviation and road fuels, better demand from Asia (specially in Gas) and end of Russia-Saudi conflict has been supporting the prices, the negative data on China, US – China tensions, Worsened corona situation in some countries particularly India and America, were weighing heavily on trader’s mind.

With declaration of corona vaccine by Russia and hopes of few more launches by September, we can expect crude oil prices to cross the resistance of 45 USD and inch towards the range of 49-50 USD per barrel. The next resistance will be around 53-55 USD per barrel and crude oil can spent some time there.

Though IEA and OPEC have declared a drop of 8-9 mbpd for this year, we have seen a sideways trend in crude oil prices. This indicates that the news was digested well. The positive part is that almost 50% of the drop of 16 mbpd in Q2 2020 has improved by 50%.

Dollar was strengthening, particularly when Gold prices peaked up. But now Dollar is weakening, and crude oil prices have some hopes from currency market. After the US Stimulus, Dollar may continue weakness further and it will support oil prices.

American labor statistics indicated that jobless claims are dropping. The last data indicated that the unemployment numbers are plateauing.

It seems that market is waiting positively for a stimulus in major economies and introduction of COVID 19 vaccine. Both these events will push the crude prices up. If OPEC and Russia could hold their nerves on additional glut, they can continue to offset the drop in demand. Minor production rise in Libya, Iraq and USA will again put pressure. So we can expect the Brent crude to continue to trade between 50-51 USD per barrel for second half of the year.